In two judgments in April 2024, the Dutch District Court Overijssel ruled in favour of two online gamblers who filed suit against two online gambling companies. The online poker players sought refunds of their losses on gambling sites because the sites were not licensed under Netherlands law and were operating illegally.
Background
The cases concern two players who had lost money on poker sites between 2006 and 2019. One case involved 15 years of online activity while the other case covered only two years. The money was paid by the players to two online gambling companies based and licensed in Malta with no licence to operate in the Netherlands. (Applying for a licence had been impossible because online gambling was not legalised in the Netherlands until October 2021).
The players argued that since these gambling companies operated without licenses in the Netherlands, the gaming agreements each player agreed to were null and void and the sites should reimburse their losses.
Counter claims
According to the gambling companies, the gaming agreements with the two players were legally valid because the ban on offering online gambling was not actively enforced. Dutch politicians at that time were already pushing for legalisation. The Court rejected this claim and pointed out that in 2019 the Netherlands Gaming Authority had fined one of the defendants EUR 350,000 for illegally offering online gambling.
One gambling company claimed that ongoing revisions to online gambling laws in the Netherlands rendered certain parts of those laws inapplicable at various times, which allowed a gambling company without a licence to legally offer services to Dutch players. The judge rejected that line of defence.
The judge also rejected a parallel defence argument that the losses the player incurred were to other online poker player and not to the gambling company itself. The judge’s rationale for rejecting that defence was that the plaintiff deposited the money into an account created and hosted by the gambling company, and the losses were paid out of that account’s balance to other players along with fees that the gambling company earned in the process.
The other defendant claimed that ruling in favour of the plaintiff would mean that the individual was permitted to gamble without risk and freeroll the site. The judge rejected that argument on the basis that the contract between the player and the gambling is null and void, which means that it had never existed in a legal sense and any fees charged under its terms of service were invalid.
District Court Overijssel rulings
The court’s ruling was strictly factual in the two cases: there had been no licence for the Dutch market and thus the agreement with each customer was declared null and void. The agreements made between the operators and Dutch customers were then considered invalid, thereby compelling the gambling sites to pay for the losses suffered.
In the rulings, the gambling companies were both ordered to issue refunds for the net losses of the two players in addition to interest and assorted legal fees. Together, the refunds amount to more than EUR 400,000. Â Although both gambling companies have the right to appeal, the judgment has been declared provisionally enforceable and the companies must comply immediately.
Conclusion
This is the first time that a judge has ordered online gambling companies to refund losses incurred by players. The ruling sets an important precedent.
For more information on this ruling, Dutch gaming and the laws regulating the sector, contact your CMS client partner or these CMS experts.
https://cms-lawnow.com/en/ealerts/2024/05/dutch-court-rules-losses-to-online-gamblers-must-be-repaid
